Forum Replies Created
Sure, if you can get a FIXED rate loan, I’d say back up the truck and get all you can. Let me know where you can get a loan like that!
Gold prices will skyrocket, but wealth in "paper gold" will be lost to counterparty default or exchange default risk.[/quote]
First thanks for the very enlightening posts. Second, can you please explain further what you mean by the above statement? For example, if one were to be invested in a gold ETF, such as GLD, where is the counter-party risk in that investment? I thought GLD had to have physical gold purchased somewhere whenever a purchase of the ETF itself was made, but I am nowhere near an expert on this. Thanks!
I am simply rebutting the "logical grid" argument put forth by Arthur. As for all your evidence, there are thousands of scientists who disagree. You can find some of them by visiting http://www.petitionproject.org/ among other places.
I do not assume, and do not believe my post would lead anyone to assume, that you propose that humans not alter nature in any way.
What I did point out, is that your argument could be used by anyone to rail against any human activity related to any natural phenomena, and that makes it a meaningless argument:
"We are not sure if X causes Y, but since it might, let’s not do X anymore. Preventing X is going to cost us $10 trillion, but allowing Y might cost us the entire planet, so let’s not do or allow X anymore."
The scary part is who gets to decide what X and Y are, and who are the lucky virgins?
If nothing is going to be based on facts, as you propose in your final paragraph, what is the point of even discussing this? You want everyone to believe circumstantial evidence and suggest we be OK with it because no damage will be done. I submit you do not know what the unintended consequences of the changes you (global-warmers) propose we make are or could be, anymore than you know what the consequences of what we’ve done so far are.
Here’s how I look at the Global Warming/Climate Change issue:
If Global Waming is natural and we do nothing, then no harm, no foul.
If Global Warming is natural and we do something with the assumption that it is anthropogenic in origin, then we won’t fix it and we’ll be out a few trillion as we watch the earth die huddled in our refuges.
If Global Warming is anthropogenic in origin and we do nothing, then we’ll save a few trillion as we watch the earth die huddled in our refuges.
If Global Warming is anthropogenic in origin and we do something, then we’ve spent a few trillion and saved (hopefully!) the earth in the process.
Based on this grid, then, the only rational course is to try and do something about it. The worst that can happen is we spend a lot of money with no effect but the best that can happen is that we reduce or eliminate the effects. Whereas the alternative means that we ultimately lose no matter which course we take.[/quote]
If that isn’t a tautological argument, I don’t know what is! You could apply that reasoning to ANY human activity and thereby conclude that we should all take happy pills and morph into a permanent sleep. We don’t know what the ultimate effects of (fill-in-the-blank) are, so let’s not do it and find every means possible of preventing others from doing it.
There is no such thing as a cause without an effect, and any and all human economic activity involves applying human effort (labor) towards natural resources (i.e., altering the earth) in an effort to make our lives easier. It doesn’t matter if you ride a horse or a bicycle to work, you’re still altering nature. It doesn’t matter if you grow your own food – you’ve still altered nature. Even if you do take happy pills and go to sleep 6-feet under, you’ve still altered nature!
We could also apply this argument to other natural phenomena. That’s what ancient civilizations did when they decided that throwing virgins into volcanoes would naturally please the gods so that they would take it easy on the natives. We don’t know if this will work, but there is a chance, and if we do nothing, things could get worse. Who’s first?
Until somebody can convincingly explain to me why remnants of berry cultivation have been found in England from circa 800 – 1300’s (where it is now too cold to grow them there now), and other agricultural evidence points to a "warm era" around the same time long before the discovery of coal, never mind oil, I do not understand how anyone can believe in man-made global warming.
The answer to your first question is, it hasn’t. The last 8 years
haven’t warmed as rapidly as before, but 2005 is still the second
warmest year on record, and some more of those years are in the top
ten. Your second question I have no idea how to answer since it isn’t
clear what you’re defining as the industrial age. Aren’t we still in
the industrial age? Yes, earth’s temperatures do fluctuate with solar
activity. Although I haven’t seen anything definitive on the subject,
it makes sense to me that the last 8 years may not have been warming as
fast is because we are in an unusually quiet period of solar activity.
Meanwhile, the ice keeps melting. If you need graphic evidence of warming, I suggest there is none better.[/quote]
The period I’m referring to is 1875-1910. As for cooling over the last 8 years, that’s what the graphs I’ve seen show. If there are graphs showing the opposite, please reference them. I would sure like to know how there could be different graphs for the same thing. Hmmmm, could it be that it’s thermodynamic nonsense to try and meausre the temperature of a non-homogenous system?
As for ice melting, please send me the links. I’ve seen studies that show that for all the ice that melts on one portion of the earth, more ice gets formed somewhere else.
Although I cringe to stick my foot in these waters, due to the extreme positions on each side, here goes:
Peak Oil is a mathematical concept, not a theory. If you agree that the amount of oil on the planet is finite, then you cannot disagree that eventually we will run out of it. The only area of discussion is when this will happen. There seem to be people who think it is hapenning now, and others who think we have 100’s of years or more. Based on the evidence, I do not beleive any conclusion can be drawn either way. The data on oil reserves comes from private companies or governments who are neither requried nor obliged to disclose them accuratley, if at all. Why can’t people just agree that peak oil will happen, but the only way we’ll know when is when it’s too late?
As for Global Warming (now called Global Climate Change): Chris K. above (and I imagine many others) demand us "global warming deniers" (apparently just Greg and I) show them the proof that global warming does not exist. Last time I studied Logic, I was clearly shown how it is impossible to prove a negative. It is Global Warming Believers that need to prove, beyond a shadow of a doubt, that global warming exists, not the other way around. I am a scientist, by the way, and I am not convinced. I couldn’t care less how many of my colleagues "believe" it. Science is not about believing – it is about proving. The fact the UN has to issue a new global warming proclamation every 6 months just shows how politicized this has become.
Chris, let me ask you this: would you agree that global temperatures HAVE to either go up or down in any given time period? That is, isn’t it true that temperatures HAVE to change. Can we all agree that is is IMPOSSIBLE for global temperatures to stay exactly the same, year after year, century after century? I think everyone can agree that changes in temperature are a fact of life, so at any given time, there HAS to be global warming or there HAS to be global cooling. If you’re getting the same measurement, you are not measuring closely enough.
If increases in CO2 levels cause global warming, why has the Earth been on a cooling trend for the last 8 years? Also, why was their a decrease (in temperatures) circa the industrial age? I’ve seen graphs comparing the incidence of sunspots directly to Earth temperatures, and they are remarkably in tandem – much more convincing than anything else I’ve seen. Given that the sun causes global warming and cooling every day and every night, and every summer and every winter, Occam’s Razor tells me that the sun is the likeliest source of global temperature and climate change. Unfortunately, we only started documenting sunspots recently. But there is also evidence that the earth has been much warmer than it is now, long before the industrial age. If you want this evidence (agricultural) let me know. This contribution is meant to be on the macro-logic level, not a step-by-step back and forth on each and every piece of evidence either way.
Does that mean our gas guzzlers, industrial plants, and airplanes have absolutely zero effect of the environment? Of course not. Everything has an effect, period. But the point is, nobody has been able to prove that these emissions are causing global warming. Just like your cholesterol example, maybe the exact opposite is occuring and we are actually contributing to global cooling. Yes that’s totally contrary to common sense and to the 95% of scientists who believe in global warming – two characteristics that applied to what people believed about cholesterol not that long ago, the shape of the earth a few hundred years ago, blood transfusions less than 100 year’s ago, the basic components of life 54 years ago, the list goes on and on. Or maybe these effects are negligible compared to the force exerted by the sun.
I don’t deny global warming. I deny it’s been proven. It may not even be prove-able, and we may be acting in ways that make the situation worse for all we know.
I also think part of the Global Warming Movement has been Hi-jacked by those who simply oppose capitalism and everything it stands for. For them, it appears to be a bandwagon they had to jump on upon the collapse of the Soviet Union.
: we live on a finite planet with finite resources. We know new oil will not be produced by the Earth faster than we’re consuming it, so the
Be very careful with this opinion… most subprime mortgages were thrust
on minority borrowers that could afford standard mortgages. For
evidence, prometheus6.org has dozens of articles spelling it out. Also
remember that mortgages were affordable at the beginning rates of an
ARM but became unaffordable as the rates rose. In addition, take into
consideration that lots of people have been, and are, losing their
jobs. Finally, as simple as this may seem to us, most people didn’t
have the financial savvy to understand all the options or consequences
of what they were given with their mortgages and didn’t have the
resources to find out.
I, for one, do not welcome draconian opinions on this complex issue.[/quote]
Please see this article from the NY Times, published in 1999: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all and NOTE PARAGRAPH 8, quite a prediction from 10 YEARS AGO!!
Fannie Mae Eases Credit To Aid Mortgage LendingBy STEVEN A. HOLMESPublished: September 30, 1999
In a move that could help increase home
ownership rates among minorities and low-income consumers, the Fannie
Mae Corporation is easing the credit requirements on loans that it will
purchase from banks and other lenders.
The action, which will
begin as a pilot program involving 24 banks in 15 markets — including
the New York metropolitan region — will encourage those banks to
extend home mortgages to individuals whose credit is generally not good
enough to qualify for conventional loans. Fannie Mae officials say they
hope to make it a nationwide program by next spring.
Mae, the nation’s biggest underwriter of home mortgages, has been under
increasing pressure from the Clinton Administration to expand mortgage
loans among low and moderate income people and felt pressure from stock
holders to maintain its phenomenal growth in profits.
addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings
are not good enough to qualify for conventional loans, can only get
loans from finance companies that charge much higher interest rates —
anywhere from three to four percentage points higher than conventional
”Fannie Mae has expanded home ownership for millions of
families in the 1990’s by reducing down payment requirements,” said
Franklin D. Raines, Fannie Mae’s chairman and chief executive officer.
”Yet there remain too many borrowers whose credit is just a notch
below what our underwriting has required who have been relegated to
paying significantly higher mortgage rates in the so-called subprime
Demographic information on these borrowers is
sketchy. But at least one study indicates that 18 percent of the loans
in the subprime market went to black borrowers, compared to 5 per cent
of loans in the conventional loan market.
In moving, even
tentatively, into this new area of lending, Fannie Mae is taking on
significantly more risk, which may not pose any difficulties during
flush economic times. But the government-subsidized corporation may run
into trouble in an economic downturn, prompting a government rescue
similar to that of the savings and loan industry in the 1980’s.
the perspective of many people, including me, this is another thrift
industry growing up around us,” said Peter Wallison a resident fellow
at the American Enterprise Institute. ”If they fail, the government
will have to step up and bail them out the way it stepped up and bailed
out the thrift industry.”
Under Fannie Mae’s pilot program,
consumers who qualify can secure a mortgage with an interest rate one
percentage point above that of a conventional, 30-year fixed rate
mortgage of less than $240,000 — a rate that currently averages about
7.76 per cent. If the borrower makes his or her monthly payments on
time for two years, the one percentage point premium is dropped.
Mae, the nation’s biggest underwriter of home mortgages, does not lend
money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary market. By expanding the type of
loans that it will buy, Fannie Mae is hoping to spur banks to make more
loans to people with less-than-stellar credit ratings.
Mae officials stress that the new mortgages will be extended to all
potential borrowers who can qualify for a mortgage. But they add that
the move is intended in part to increase the number of minority and low
income home owners who tend to have worse credit ratings than
Home ownership has, in fact, exploded
among minorities during the economic boom of the 1990’s. The number of
mortgages extended to Hispanic applicants jumped by 87.2 per cent from
1993 to 1998, according to Harvard University’s Joint Center for
Housing Studies. During that same period the number of African
Americans who got mortgages to buy a home increased by 71.9 per cent
and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
these gains, home ownership rates for minorities continue to lag behind
non-Hispanic whites, in part because blacks and Hispanics in particular
tend to have on average worse credit ratings.
In July, the
Department of Housing and Urban Development proposed that by the year
2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up
of loans to low and moderate-income borrowers. Last year, 44 percent of
the loans Fannie Mae purchased were from these groups.
change in policy also comes at the same time that HUD is investigating
allegations of racial discrimination in the automated underwriting
systems used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants.
END OF ARTICLE
In my opinion, this mess has two parties: an artificially-created (that is, government-created) mortgage-buying supply of money in the form of Fannie Mae and Freddie Mac (as so well presented in the above article), and an irresponsible, uneducated supply of mortgage-buyers, created by a culture that does not believe in savings, does not understand basic credit principals, and has become acustomed to government hand-outs.
This is not a draconian opinion, it is just reality. I beleive the best thing that could happen right now is for banks to foreclose on delinquent borrowers. That would help all parties. Banks get their collateral back, which will alleviate the strain on their balance sheets, which is one of the strains keeping them from lending anymore money. The delinquent borrowers will get out of a house they cannot afford and switch to renting, which is what they should have been doing in the first place. They will have more money left over for food and other necessities.
For those who worry about people "losing" their home, please think about it: what are they really losing? They didn’t put any money down! In most mortgages, the first five years of payments amount to almost nothing in equity. If they stay in the home, with their current loan, that’s basically an enormous liability on their personal balance sheet and credit worthiness, and a liability they will have to live with for decades. Apparently, it’s also less than the actual value of the home in many cases! If I were in this situation, I’d be begging for them to foreclose on me! Let me out!
Some want government to bail out these "home-owners". What is that other than a devaluation of our currency, and a slap in the face to the rest of us who have not made these mistakes? What incentive will there be in the future for making conservative, responsible decisions about home purchasing? What signal will this send to future home-buyers when they consider the risks of default (answer: don’t worry, someone will bail you out)? What signal will this send to banks when they consider future loans? (answer: don’t worry, make the loan anyway – someone else will pick up the tab).
Picking up the tab and holding none accountable is only a recipe for repetition of expensive mistakes.
I know it’s easy to feel sorry for people, but in my opinion, the road to hell is paved with good intentions.
Everywhere I turn these days, I see financial sites pushing people to
buy gold as if it is the only salvation left on the planet. After a
while, I begin to think – wait a minute. If everyone is buying gold,
who’s selling it – and why? Because, if they’re selling gold, they’re
taking in some form of paper currency which myriad "economists" on
these various sites are swearing up and down will be worthless in short
order – perhaps even this year. Are they all wrong?
In years past, whenever things around the world have gotten tense (war,
recession, etc.), gold has always spiked as a "safe haven". However,
this time gold (which slowly increased in price in 2008) seems not to
be responding as usual. It almost smacks of "manipulation" in some way
although I wouldn’t have the faintest idea of how to prove that.[/quote]
[quote]Maybe it has to do with this scenario:
Banks are not lending. This means deleveraging,
because companies and banks must liquidate to pay of loans. The money
supply contracts. This is because the fractional banking was our
printing press. Loans are new money. No loans, no new money. Loans
payed of is money contraction.
This means deflation. Money get worth more per unit.
Prices fall, also gold.
What if major players are selling gold now just to
buy back later. Or selling short.
In a normal recession there is not as much
deleveraging. In a depression there is. The inflation comes after that[/quote]
I just saw two "experts" on CNBC this afternoon taking each side of the gold question. I do not see blanket agreement to buy gold. I do see more people pushing for it now, but certainly there is no consensus. As for why gold hasn’t spiked: everything else went down 30-50%. Gold lost what, 8%? I guess -8% is the "new spike". Can you point to anything else that held up that well?
One reason it could have gone down is part of what I alluded to: over-leveraged players being forced to sell. Imagine you just lost $10 million on Madoff but fortunately you didn’t put all your eggs in one basket like other people did and you actually have some gold left – now you have to sell it to meet obligations you were planning on meeting using the phony returns from Madofff’s scheme. The same holds true for many others who lost money, whether in corrupt schemes or legitimate schemes. They say gold is the "safest" investment – where you put that money for a rainy day. Well, for a lot of people, it’s been pouring.
I agree we may get a bout of deflation and things including gold may go down. If that’s the case, I’ll be buying more of it. I have the long term view that we’ll either have serious inflation (best case) or hyperinflation (worst case resulting in a complete currency collapse). What I don’t know is in what month, quarter or even year that’s going to happen and I’m not going to waste time or lose sleep trying to figure that out. I also will not put all my money into gold because I don’t know what’s going to happen. The US and other governments have confiscated and made it illegal to own gold before, and I believe strongly in the #1 rule of investing: do not put all your eggs in one basket.
I do not believe it is possible for there to be a massive manipulation scheme or a conspiracy to control the price of gold. Even if some group was successful at pulling off such a caper without a whistle-blower blowing their cover, there is no way they could do so continually. It they could, why didn’t they put their manipulative genius to work in keeping the credit collapse from happening to begin with?
Anyway, that’s my 0.0000238 ozs of gold – I mean 2 cents.
All the folks you mentioned are still exchanging something of value
(gold) for something which many believe will become worthless (fiat
currency) in the near future. Either they are all very dumb or they
know something the rest of us don’t.
Is it possible that the existing fiat currency will be exchanged for
a new currency so that people don’t lose money? E.g. those of us who
have our retirement money in bank CD’s.[/quote]
Most businesses cannot put their entire holdings in gold. They need some portion of their reserves in cash to pay salaries, service contracts, buy equipment, pay debts, etc. Take a school or university, for example: they receive most of their annual revenue at the beginning of the year, when tuition is paid. About 80% of that revenue is disbursed throughout the year just in salaries, and another 15% in other expenses. Hopefully 5% gets saved for capital replacement. You cannot just have it all in gold and liquidate part of your position every month to meet operating expenses.
Other businesses or private persons may liquidate gold because they see something more attractive – perhaps property or a business deal, or more likely, because they have to pay down debt. Granted, right now business investment and equipment aquisition is down, as well as hiring, but these are just some reasons normal, every-day people or businesses, including those who think gold is the way to go, would sell gold.
Others just play the market, selling gold when they think it’s near the top of it’s current trading range, and buying it at the bottom of what they define as it’s trading range.
Gold miners have to sell to pay salaries and other extraction costs – there’s a supply that will always be selling a good protion of their holdings. Banks may sell to buy dollars, especially right now when dollar outflows from the US have collapsed. In Costa Rica, where I live, the bank tries to maintain the dollar within a certain range of the local currency, the colon. Right now, they are facing a dollar-shortage (investment and tourism is down), so the colone is expected to have strong devaluation pressure from the dollar. If we were a country that had gold reserves (which I am 100% certain that we don’t!), we could sell gold to raise dollars and keep our currency from depreciating. I am sure the geniuses at the central bank here will instead print more colones and use them to buy the dollars they think they need.
In short, the market is full of all sorts of different players facing different short-term and long-term pressures and goals. If it didn’t, there wouldn’t be much of a market for anything at all.